HECM for Purchase

The HECM for Purchase Program is a safe way for retirees to purchase a home with special benefits that set it apart from conventional mortgage financing options.

Maybe It Really Is Time To Downsize

But don't pour your cash back into the ground! It was miracle enough just to extract some profit from your recent home sale. Don't put it back in the ground! Use the HECM for Purchase Program to purchase your next retirement cottage or condo and bring less cash to the closing table. Keep the rest of those profits in your pocket to hand over to your financial planner. And, the most popular feature is that borrowers are not required to make monthly mortgage payments. This is a huge advantage to retirees who are living on fixed incomes.

Borrowers are required to pay a mortgage insurance premium (MIP) under the terms of the loan but, in doing so, they are assured that they and their heirs will never be liable for any deficiency if the property is sold to satisfy the loan balance.

In one educational example, a proposed HECM for Purchase buyer, age 76, may have sold the prior residence and received $300,000 in proceeds. Normally, a retiree may not want nor qualify for a new mortgage and, in such a case, may wish to purchase the new home in an "all cash" transaction.

It's Time to buy that Condo

Through the use of HECM for Purchase, the retiree could potentially borrow a majority of the purchase requirement using the Home Equity Conversion Mortgage and, in so doing, would only have to put up some of the prior sale proceeds at the closing table. The leftover funds would then be available for other uses and investments.

The HECM loan does not require monthly mortgage payments and the buyer is not required to pay off the mortgage until such time as the home is sold or if the borrower or eligible non-borrowing spouse either dies or moves away from the home. The homeowner remains responsible for paying property taxes, homeowners insurance, and homeowners association dues if applicable.

 

 

General Requirements

You must be 62 years of age or older and:

  • Own the property outright or have a small mortgage balance
  • Occupy the property as your principal residence
  • Meet the guidelines of the HECM Financial Assessment analysis. Not be delinquent on any federal debt
  • Participate in a consumer information session given by an approved HECM counselor
The following eligible property types must meet all FHA property standards and flood insurance requirements:

  • Single family home or 1-4 unit home with one unit occupied by the borrower
  • U.S. Department of Housing and Urban Development (HUD) approved condominium
  • Manufactured home that meets FHA requirements

Among the Features

  • The ability to use your home equity to help maintain a more comfortable standard of living, in your own home.
  • Tax-free* loan proceeds you can use however you choose. * Not tax advice. Consult a tax professional.
  • No monthly principal and interest mortgage payments. If you are approved and have an existing mortgage or home equity loan, you can pay off such loans and improve your monthly cash flow, with no minimum monthly mortgage loan payments. NOTE: As the homeowner, you remain responsible for paying property taxes, homeowners insurance, homeowner’s association dues, and normal property upkeep and maintenance. Failure to do so could require payment of the loan in full.
  • Advantages of the HECM-for-Purchase

  • Downsize to a new home and use less out-of-pocket cash
  • Keep personal funds from being poured back “into the ground”
  • Retain funds at hand to manage retirement shortfalls and healthcare costs
  • Never have to make a regular monthly mortgage payment
  • Sell the home at any time and keep any profits that exceed the loan balance
  • Never have to pay off the mortgage until the home is sold, or if the last borrower or eligible non-borrowing spouse either dies or moves away